Terunobu Maeda

President and chief executive officer, Mizuho Holdings

Nationality: Japanese.

Born: January 2, 1945, in Japan.

Education: University of Tokyo, LLB, 1967.

Career: Fuji Bank, 1968–2000, director and general manager of Credit Planning Division, director and general manager of Corporate Planning Division, managing director of Public and Financial Institution Group, chief financial officer, and deputy president; 2000–2001, vice president; Mizuho Holdings Corporation, 2001, president and CEO.

Address: Mizuho Financial Group, 1-5-5 Otemachi, Chiyoda-ku, Tokyo, Japan; http://www.mizuho-fg.co.jp.

■ Terunobu Maeda was president and CEO of Japan's Mizuho Holdings, the first bank with $1 trillion in assets and the largest financial services company (by assets) in the world. A victim of the bursting of Japan's economic bubble and declining stocks, Mizuho suffered from persistent mountains of bad debt and apathetic management. After a steady stream of financial losses and a massive computer glitch that affected 2.5 million transactions, Maeda was seen as a weak leader shirking responsibility.


Terunobu Maeda joined Fuji Bank in 1968 after graduating from the University of Tokyo with a bachelor of laws degree. Through the years he served in a variety of capacities, as director and general manager of the Credit Planning Division, director and general manager of the Corporate Planning Division, managing director of the Public and Financial Institution Group, chief financial officer, deputy president, and vice president.

Fuji Bank, along with Dai-Ichi Kangyo Bank and the Industrial Bank of Japan (IBJ), merged in September 2000 to

Terunobu Maeda. © Reuters NewMedia/Corbis.
Terunobu Maeda. ©
Reuters NewMedia/Corbis

form Mizuho Holdings. Mizuho Holdings thus became the largest bank in the world in terms of assets, surpassing even Citigroup. Japan's regulatory Financial Services Agency (FSA), saw the integration as the ultimate example of consolidation of Japanese banks as they tried to cope with massive loan defaults.

In November 2001, six months into the fiscal year, Mizuho Holdings reported a loss of ¥265 billion ($2.1 billion). The company then stated a net loss of ¥600 billion ($4.9 billion) for the fiscal year ended March 31, 2002. To assume responsibility for the bank's huge losses, Mizuho Holdings' president, Katsuyuki Sugita; Fuji Bank's president, Yoshiro Yamamoto; and IBJ's president, Masao Nishimura, resigned. The resignations were designed to rejuvenate management. One move toward that end was the appointment of Terunobu Maeda, a vice president of Fuji Bank, to replace Sugita as president and CEO of Mizuho Holdings. Yamamoto was first considered but was later rejected in favor of the younger Maeda. At a time when the bank wrote off ¥2 trillion ($16.2 billion) in bad loans, up from a projected ¥1.03 trillion ($8.3 billion), some critics suggested that a clean sweep of all management was a necessary approach.


On April 1, 2002, when the three merged banks officially went online as one megabank, a malfunction in the network software crippled the computer system. Money transfers were delayed or not delivered at all, customers were billed for transfers that did not go through, and customers were double-billed for transactions performed on automatic teller machines (ATMs). All told, seven thousand ATMs were shut down, 60,000 accounts were debited twice for the same transaction, and customers incurred a total of ¥1 billion ($7.7 million) in damages. In the first five days of operation, 800,000 utility and credit card transfers and withdrawals were inaccurate, affecting customers of such companies as Tokyo Electric Power, Tokyo Gas, Nippon Telegraph & Telephone, and Credit Saison Company. The glitches affected about 2.5 million ATM transactions.

Maeda immediately assembled an emergency team to analyze the problem. Days later, in an unusual move, Japan's parliament, the Diet, summoned Maeda to explain the fiasco. The Diet rarely required top bank executives to explain operational mistakes. Maeda at first apologized and asked for more time to fix the problems. But he stunned the public when he shame-lessly told the Diet that the malfunction had not caused damage to users.

Politicians were angry and feared that the computer debacle and the ongoing debt problems of Japan's banks would erode people's faith in the Japanese financial system and that they would pull their money out in droves. They complained that Mizuho had embarrassed Japan internationally. In the Economist , Shintaro Ishihara, governor of Tokyo, which was Mizuho's largest depositor, said of the bank, "Maybe it wouldn't be so bad if it was forced out of business" (April 27, 2002).

FSA's chief, Hakuo Yanigisawa, even considered punishing Mizuho. Maeda responded that his bank would contend with those responsible. Maeda noted in the Japan Times , "Once operations resume and we know how and why the troubles occurred, we will clarify responsibility, including my own, and take appropriate action" (April 17, 2002).

Tokyo Electric had considered filing a lawsuit. After two weeks the power company giant was still waiting for ¥5.2 billion ($40 million), encompassing 547,000 delinquent or missing automatic transfers. In response, Maeda announced that Mizuho would compensate its corporate customers for financial damages and would pay the penalties that customers were charged for delays in paying loans and credit card bills. Mizuho paid roughly ¥9.8 billion ($74.7 million) to Tokyo Electric.


The computer debacle was only a symptom of greater problems indicative of Mizuho's management climate. Although they had had years to prepare, management of the three banks engaged in power struggles and infighting over who would oversee the network integration of the banks' computer systems. Complacency, lack of preparation, poor communication, and management's neglect of the computer system's progress plagued the company. Management even dismissed requests by utility companies to test the debit system and requests by FSA inspectors for progress reports before the system went online.

Investigations by the FSA and Mizuho traced the computer fiasco to a chief information officer originally from Dai-Ichi Kangyo Bank who had failed to notify top management about a possible large-scale system failure for fear of delaying the April 1 launch. Maeda said in Japan Times , "The officer in charge of computer systems did not think the glitches that appeared during the tests could not be overcome, and no information to the contrary was passed on" (June 20, 2002).

The FSA announced disciplinary action against Mizuho. Short of stepping down, Maeda, along with Mizuho Bank's president, Tadashi Kudo, and Mizuho Corporate Bank's president, Hiroshi Saito, agreed to a 50 percent reduction in salary for six months. Mizuho Holdings itself punished 114 executives and employees responsible for computer malfunctions with 15–30 percent pay cuts. This disciplinary action was the largest for any Japanese banking firm in response to a scandal. The FSA also issued a business-improvement order to Mizuho to strengthen its internal control and submit progress reports on methods to prevent another recurrence of computer failures. Another operations mess would require Mizuho's top management to go. Despite the reprimands and preventive measures, analysts were doubtful that Mizuho's intensions to improve were sincere.

In the midst of the computer scandal, Mizuho Holdings announced its performance for fiscal 2001, ended March 31, 2002. Mizuho reported a group net loss of ¥976 billion ($7.7 billion). For fiscal 2001 the bank was able to dispose of ¥2.38 trillion ($18.8 billion) in debt, a 218 percent increase from fiscal 2000. Maeda praised the achievement, saying that Mizuho's bad-debt write-offs had accelerated in the past year. This was in line with the Japanese government's demands that the nation's banks shed their bad debt over three years or face government intervention.


At a June 2002 meeting, Maeda apologized to about 1,800 shareholders for the computer meltdown. In Mainichi Shimbun , he said, "Problems with the settlement system, which is a social infrastructure, adversely affected our customers and shareholders. I apologize for that. We are firmly determined to create a new business model" (June 25, 2002). Maeda also expressed regret for the bank's bad performance. Some shareholders criticized the board members' lack of crisis management and encouraged those at the top to change their ways or resign.

In a climate of plunging stocks and critical health for Japan's top banks, FSA's new bank minister, Heizo Takenaka, pronounced no Japanese bank "too big to fail" and threatened stricter regulatory policies. In October 2002 Maeda was literally unable to show his face. Addressing an invitation-only banking conference hosted by Merrill Lynch in Tokyo, he read from a prepared statement, nose down, with only the top of his head toward the audience. Commenting in Newsweek , one attendee observed, "It was the worst presentation in the world, not a single number or target in it. [Maeda] didn't give the impression that he was chairman of the world's largest bank" (October 21, 2002).


Takenaka put his foot down to the banks, which were plagued by write-offs, low interest rates, and falling land and stock prices. He urged them to dispose of nonperforming loans and force no-hope borrowers into liquidation. With bank stocks trading at record lows, Takenaka threatened that the government would nationalize the weakest lenders. Maeda disagreed, quoted in the New York Times as saying, "Nationalization is not the best way for managing our business. It is more efficient to handle this privately, and we can do it" (November 26, 2002). Maeda also added his voice to the top seven Japanese banks, which carried a combined ¥26.8 trillion ($216 billion) in bad loans, in objecting to the government's plan to bail out the struggling banks.

At the end of 2002, after seeing Mizuho's share price drop below ¥100,000 ($793.65), Maeda unveiled a new restructuring strategy. He planned to reduce the pay of top executives and board members by 30 percent, cut 6,300 jobs (or 21 percent) of the workforce, lower salaries by 10 percent, close 120 branches worldwide, and sell preferred shares to raise capital. In all, the efforts were expected to reduce costs by $1.3 billion, or 20 percent, by March 2005.

Analysts believed that Mizuho's changes would not be enough without government intervention. Some thought that the bank would fail in 2003. Even investors pushed down the company's shares to nearly half their value in September 2002. But Mizuho stayed afloat by selling its safest assets, government bonds; raising funds from other financial institutions and business corporations; and cutting lending to Japanese corporations in an attempt to stave off possible bad debts.


Mizuho's financing methods were being criticized by the media, and Mizuho's management team was being humiliated. Economists who had hoped Mizuho (whose name means "fresh harvest of rice") would be an example of recovery now viewed the company as a symbol of the failure of the Japanese economy. Financial advisers said that the bank needed to regain the trust of customers, investors, and business partners. The Japanese government raised fears that the country's banking system was headed for a meltdown. Maeda himself was being criticized for not taking responsibility for the bank's deteriorating performance and for not being a strong leader.

Maeda countered with a declaration to "resolve all fear for the future of the bank" and to remain in office to oversee his bank's turnaround. Nevertheless, at a February 2003 shareholders' meeting, attendees rejected a confidence motion against Maeda, who had failed to control the bank's bad debts. For the 2002 fiscal year ending March 31, 2003, Maeda once again found himself apologizing for a group net loss of ¥1.95 trillion ($16.4 billion), but he was at least able to praise the achievement of successfully raising ¥1 trillion ($8.4 billion).


In a commentary on the rapid decline of Mizuho's management structure, the Weekly Post described the company's near empty executive suite. Half of the 12 executives remained. The empty office reflected the forlorn image of Maeda, CEO of the world's largest bank. The thin man with a plain view of life spoke to others softly and often cast his eyes down. He was said to arrive at work at 7:00 a.m. and have lunch precisely at 12:00 p.m. Some people described him as a rationalist and a mystery man, while others said that he looked like a mayor's assistant in a small town. A former executive of Mizuho said that part of Mizuho's problems stemmed from appointing Maeda as its president.

In March 2004 Japan's House of Representatives Committee on Financial Affairs held a panel with the presidents of four major banking groups. Maeda reported that Mizuho Financial was conducting tests for an integrated computer system in an effort to avoid a repeat of the company's computer debacle of the previous year.

See also entries on Fuji Bank, Ltd. and Mizuho Financial Group Inc. in International Directory of Company Histories .

sources for further information

Belson, Ken, "Pressure Is Building on Banks in Japan," New York Times , November 26, 2002.

Bremmer, Brian, "Japan's Cracked Banking Colossus," BusinessWeek , December 23, 2002.

"Crisis Facing Mizuho Financial Group Symbolizes Ailing Japanese Economy," Weekly Post , May 19–25, 2003.

"Financial Giant Announces Punishment for Its Top Staff," Japan Times , June 20, 2002.

"Heads Begin to Roll over Mizuho Fiasco," Japan Times , April 17, 2002.

"In a Hole, Digging Deeper," Economist , December 14, 2002, pp. 66–67.

Merrell, Caroline, "Investors Support Mizuho's $37bn Share Issue," Times , February 6, 2003.

"Mizuho Financial Group's Executives Get 17 Million Yen Remuneration on Average," Kyodo News International , June 25, 2002.

"Mizuho Head Apologizes over Huge ATM Blunder," Mainichi Shimbun , June 25, 2002.

"Three Top Mizuho Execs Get Pay Cuts for ATM Botchery," Mainichi Shimbun , June 9, 2002.

"Undispensable," Economist , April 27, 2002, pp. 72–73.

Wehrfritz, George, "Flat on Its Back," Newsweek , October 21, 2002, pp. 52–53.

—Lorraine Savage

User Contributions:

Comment about this article, ask questions, or add new information about this topic: